FTSE 100 movers: Water companies rally; B&M hit by downgrade

(Sharecast News) - London's FTSE 100 was down 0.4% at 8,243.87 in afternoon trade on Friday. United Utilities and Severn Trent were among the gainers as JPMorgan Cazenove upgraded both and placed the shares on 'positive catalyst watch' as it turned more positive on the UK water sector for the first time since it turned cautious in 2022.

The bank lifted Severn Trent to 'neutral' from 'underweight' and upped the price target to 2,700p from 2,450p. It upgraded United Utilities to 'overweight' from 'neutral' and pushed the PT up to 1,250 from 1,050p.

"We believe that the share prices now reflect headwinds including low regulatory visibility, and expectations of less attractive proposed returns compared to electricity networks," it said.

"However, we believe that the market underappreciates certain positives, especially for companies like United Utilities and Severn Trent, with a long track record of outperforming regulatory allowances, which we expect to continue.

"We expect the upcoming regulatory determination on July 11 to solidify the growth story for the sector, with more investment needed for environmental performance to improve."

Compass Group was also in the black as the caterer announced an agreement to buy up to $250m (£196.7m) of its ordinary shares. The company said the buyback would be the second and final phase of the $500m share repurchase programme first announced with its full-year results on 20 November last year.

B&M European Value Retail was under the cosh after Morgan Stanley downgraded the shares to 'underweight' from 'equalweight' and cut the price target to 433p from 575p as it said like-for-like growth is slowing and it expects margins to contract year-over-year in FY25, which is a worse outlook than UK retail peers.

FTSE 100 - Risers

United Utilities Group (UU.) 1,014.50p 2.12% Centrica (CNA) 138.10p 1.58% Ocado Group (OCDO) 314.70p 1.52% Severn Trent (SVT) 2,478.00p 1.52% Flutter Entertainment (DI) (FLTR) 14,910.00p 1.26% Burberry Group (BRBY) 980.20p 0.82% Compass Group (CPG) 2,255.00p 0.76% Haleon (HLN) 331.40p 0.67% Smith & Nephew (SN.) 1,004.50p 0.55% British American Tobacco (BATS) 2,473.00p 0.53%

FTSE 100 - Fallers

Smurfit Kappa Group (CDI) (SKG) 3,646.00p -2.46% B&M European Value Retail S.A. (DI) (BME) 467.10p -2.10% Rolls-Royce Holdings (RR.) 475.90p -1.98% Ashtead Group (AHT) 5,332.00p -1.88% Antofagasta (ANTO) 2,108.00p -1.77% CRH (CDI) (CRH) 5,898.00p -1.73% Barclays (BARC) 204.45p -1.73% Land Securities Group (LAND) 625.50p -1.73% GSK (GSK) 1,591.00p -1.67% Marks & Spencer Group (MKS) 298.30p -1.65%